Microsoft Ropes In 10th Android Licensee

Microsoft's relentless pursuit of royalties from manufacturers of Android handsets might actually be a win-win. "Since Microsoft is making so much money from Android, I don't think they're as interested in limiting it, and that's beneficial to Android," observed 451 Group analyst Jay Lyman. Plus, Android manufacturers are no doubt developing workarounds, so Microsoft's days of raking in Android profits may be limited.

By Katherine Noyes
10/24/11 3:30 PM PT

Microsoft announced Sunday that it has signed an agreement with
Compal Electronics granting the device maker coverage under Microsoft's patent portfolio for its tablets, mobile phones, e-readers and other consumer devices running Android or Chrome.

The result, Microsoft noted, is that companies representing more than half of all Android devices are now under license to its patent portfolio.

No details of the agreement were disclosed, but Microsoft confirmed that Compal will pay royalties under the terms of the agreement, which is the 10th such deal Microsoft has struck with Android device manufacturers so far.

Microsoft officials did not respond by press time to LinuxInsider's request for further detail.

'It's Past Time to Wake Up'

Though Google's Linux-based Android platform is open source software, it has been the target of patent aggression not just from Microsoft, but from Oracle and Apple as well.

Google called the platform's litigation woes the result of "a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents" in a blog post this summer by David Drummond, its senior vice president and chief legal officer.

A Sunday
blog post by Microsoft General Counsel Brad Smith and Deputy General Counsel Horacio Gutierrez seems to be a direct response to the earlier Google missive.

"For those who continue to protest that the smartphone patent thicket is too difficult to navigate, it's past time to wake up," they wrote.

"As Microsoft has entered new markets from the enterprise to the Xbox, we've put together comprehensive licensing programs that address not only our own needs but the needs of our customers and partners as well," Smith and Gutierrez said. "As our recent agreements clearly show, Android handset manufacturers are now doing the same thing. Ultimately, that's a good path for everyone."

Google did not respond by press time to LinuxInsider's request for comment.

'That's Beneficial to Android'

It's a testament to Android's strength that so many companies using the platform are doing well enough to afford Microsoft's licensing fees, Jay Lyman, a senior analyst with the 451 Group, told LinuxInsider.

HTC, Samsung and Verizon are all among the firms that have reported "significant revenue" from the platform, Lyman pointed out.

Meanwhile, Microsoft's decision to pursue patent licensing deals rather than lawsuits "makes some sense," Lyman added. "Since Microsoft is making so much money from Android, I don't think they're as interested in limiting it, and that's beneficial to Android."

A Limited Opportunity

There is a "shelf life" to Microsoft's ability to reap such rewards, however, Lyman asserted.

"We've already seen Samsung working around the technology and patents that caused some of the courtroom fights" surrounding its Galaxy Tab, he pointed out. "I would expect all Microsoft licensees are working as we speak to get around the technologies in question."

Looking ahead, then, more such deals may be inked in the short term, but eventually they'll become "less relevant to Android backers and less lucrative to Microsoft," Lyman predicted.

The fact that Android enjoys a global open source development community will likely hasten that process, he added. "That will help it to develop and compete and work around these things pretty quickly."

In the meantime, "there is some ridiculing of Microsoft out there" for pursuing a legal strategy rather than a strictly technological one, Lyman noted. "I guess that's a price they're willing to pay."

'A Fundamentally Broken System'

The fact that such a strategy is possible, however, is "the inevitable outcome of a fundamentally broken intellectual property system in the United States as it pertains to software," RedMonk analyst Stephen O'Grady told LinuxInsider.

"Industry consensus is that the patent office is unable to effectively assess software patent legitimacy, but thousands of patents are granted annually nevertheless," O'Grady pointed out.

Such assets are effectively weapons, he added, so it's not surprising to see corporations "use them to serve their varying interests. This is especially true wherever the stakes are high, as they are in mobile."

Limited Options for Google

Meanwhile, Google's options for the time being are relatively limited, O'Grady said.

"Their best option would be sweeping patent reform, but given the interests opposing this, such a change is unlikely," he explained.

"The other traditional approach is mutually assured destruction: to threaten those who would litigate over your alleged infringement with counter-litigation around theirs," he noted.

Of course, that requires a comprehensive patent portfolio -- something Google did not originally have, but that is getting closer "via direct patent purchases from players like IBM and acquisitions such as Motorola," O'Grady pointed out.

"They might also pursue a consortium approach to this problem, as the Linux Foundation has in that space," he suggested, "but this has not been their primary response to date."